The Value of Ethanol

For the first time in nearly a decade, the ethanol industry will exist without any government financial support: the blenders’ tax credit, created by Congress in 2004 to establish a healthy ethanol industry, expired on December 31, 2011.

The fact that the ethanol tax credit expired without fanfare or a fight came as no surprise. Ethanol producers and advocates have been saying with certainty that the industry can and will survive without it. But what would happen to the United States without ethanol as a fuel choice?

Let’s go back in time to the origins of ethanol in America. Ethanol was at the birth of the American automotive industry, when Henry Ford designed his first cars to run on both gasoline and Midwest-made ethanol.

But in the 1920’s, John D. Rockefeller, founder of Standard Oil, helped deliver a crippling blow to his competitor in the fuel market by funding political support for Prohibition, which banned distillation of alcohol fuels as well as consumable spirits. That was followed by a campaign in the late 1930s to displace ethanol’s use as an anti-knock fuel ingredient with lead – one of the deadliest toxins known to man.

Then came the 1970s, and the first oil shock to our economy when OPEC flexed its muscle over the U.S. economy by dialing back oil production — creating gas lines, rationing and the start of a policy that would require us to create a permanent military presence in the Middle East, at great cost to the U.S. military and to taxpayers. In response to OPEC’s manipulation of oil production to drive up costs, President Jimmy Carter set a new fuel standard of 10 percent ethanol blended into gasoline as a means of breaking the strategic hold that imported oil has over our economy.

Later, Congress adopted the Volumetric Ethanol Excise Tax Credit — the so-called “blender’s tax credit.” This was used as an incentive for fuel blenders to blend ethanol into gasoline. Read that carefully: the oh-so-hated ethanol “subsidy” was actually a tax credit, and only went to fuel blenders — never to ethanol producers, never to corn farmers. With the blender’s tax credit, the use of ethanol significantly expanded to the point where we are producing more than 13 billion gallons of ethanol annually. That is enough to meet the goal of a 10 percent blend in every gallon of gasoline sold in America.

But without those 13 billion gallons of ethanol, motorists in the U.S. are all part of a captive market that is controlled by Big Oil. The alternative to ethanol is gasoline, nearly two-thirds of which is derived from foreign oil. We’ve spent trillions of dollars importing oil, funding corruption, political adversaries and outright enemies. We have deployed to four conflicts, fought three wars, lost more than 6,000 soldiers, spent trillions of dollars, and created a whole new class of wounded warriors, thousands of whom will need long-term care funded by our government.

Besides economic costs and taxpayers cost, gasoline brings a cost to public health. Ethanol is our nation’s most-effective smog-reduction tool. Most people in the country don’t know anything of the dozens of hydrocarbon compounds that go into making gasoline — and how toxic that exhaust actually is because of those carcinogens. Without ethanol, we would be adding even more harmful emissions to the air we breathe. Former U.S. Diplomat and White House Counsel C. Boyden Gray, wrote in his Ethanol Across America White Paper, that increased use of ethanol reduces the toxic aromatics and other pollutants — like benzene, toluene and xylene — used in gasoline.

Ethanol displaces the equivalent of 500,000 barrels per day of gasoline derived from foreign oil and expands our domestic fuel supply. More gasoline can be refined from a barrel of oil if ethanol is used to increase the octane level.

Ethanol is not just another fuel choice; it is a choice for a stronger America. Domestic ethanol is the single-best alternative we have that reduces our dependence on foreign oil, improves our environment, creates jobs that cannot be outsourced and saves America money and human lives. Unquestionably, America is better off with ethanol — and by blending more ethanol into our fuel supply, our economic security, national security and all of our lives will all be made better.

Gen. Wesley K. Clark, former NATO Supreme Commander, is the Co-Chairman of Growth Energy, an organization of ethanol supporters representing more than 75 producing plants, 50 associate businesses and more than 25,000 individual members. The organization was formed in November 2008.